If you pay into a personal pension, a self-invested personal pension (SIPP) or a workplace scheme that uses "relief at source", your provider tops up your contribution with basic rate relief of 20% and nothing more. At 40% or 45%, the remaining 20% or 25% is only given if you claim it, on your Self Assessment return or directly from HMRC. Unclaimed relief can be recovered for up to four earlier tax years, and for incomes between £100,000 and £125,140 the real value of a contribution can reach 60%.
Which kind of pension do you have?
Everything turns on how your scheme gives relief, which is set by the scheme rather than chosen by you.
| Arrangement | Typical schemes | How relief is given | Anything to claim? |
|---|---|---|---|
| Relief at source | Personal pensions, SIPPs, stakeholder pensions, many group personal pensions at work | You pay 80%, the provider claims 20% from HMRC and adds it | Yes, if you pay tax above the basic rate |
| Net pay arrangement | Many occupational schemes, including most public sector schemes | Contribution taken from pay before income tax is worked out | No, full relief is given through payroll |
| Salary sacrifice | Any employer scheme that offers it | You give up salary and your employer pays it in instead | No, and you also save National Insurance |
Quick test: if what leaves your bank account or pay is 80% of the amount credited to the pension, it is relief at source. A common mistake is assuming every workplace pension is net pay. Group personal pensions use relief at source, so higher-rate employees in them often miss relief.
How the extra relief works
The extra relief does not go into the pension. HMRC widens your basic rate band (and your higher rate band) by the gross contribution, meaning the amount you paid plus the 20% top-up. An equal slice of income moves out of the 40% or 45% band into a lower one, and the tax saved comes to you.
The extra relief only covers income that would otherwise have been taxed above the basic rate. Any part of the gross contribution beyond that slice gets 20% only.
Example. A higher-rate employee earns a £70,000 salary in 2026/27 and pays £8,000 into a SIPP. The provider adds £2,000, so £10,000 goes into the pension. The return claims relief on the £10,000 gross. The basic rate band rises from £37,700 to £47,700, so £10,000 of salary that would have been taxed at 40% is taxed at 20% instead: a further £2,000 back. The £10,000 contribution has cost £6,000 in total.
Scottish taxpayers have different bands and rates. The provider still adds 20%, and the extra claimed reflects the Scottish rate each slice of income would have paid.
Why it matters more above £60,000 and £100,000
A gross contribution under relief at source also reduces your adjusted net income. That figure decides two of the harshest effects in the tax system:
- £100,000 to £125,140: the personal allowance is lost at £1 for every £2 of adjusted net income above £100,000, giving an effective income tax rate of 60% on that slice. On £110,000 of salary, a £10,000 gross contribution (£8,000 paid) restores £5,000 of personal allowance. Total relief is £6,000: £2,000 added by the provider, £2,000 from the wider basic rate band and £2,000 from the restored allowance. The net cost is £4,000 for £10,000 in the pension.
- £60,000 to £80,000 with children: the High Income Child Benefit Charge claws back 1% of Child Benefit for every £200 above £60,000. Bringing adjusted net income back down reduces or removes the charge.
How to claim, and how to backdate
If you file Self Assessment, enter the total you paid in during the tax year plus the basic rate top-up (the gross amount) in the pension contributions box for relief at source payments. Do not enter employer contributions or anything paid through a net pay scheme. You can amend a return for 12 months after the 31 January filing deadline. The return for 2025/26 is due by 31 January 2027.
If you are not in Self Assessment, HMRC accepts claims online, by phone or by letter, and will usually adjust your tax code for the current year. If you do file a return, HMRC expects the claim to go on the return rather than through the separate service.
Backdating: income tax claims can generally be made up to four years after the end of the tax year concerned. In October 2026 that reaches back to 2022/23, and a claim for that year must be made by 5 April 2027. You will need contribution statements from your provider for each year.
Limits that still apply
- 100% of relevant UK earnings: personal contributions only get relief up to your earnings from employment or self-employment for the year (or £3,600 gross if higher). Rental profits, dividends and savings interest do not count, which catches out landlords and owners paid mainly in dividends.
- Annual allowance of £60,000 across all your pensions, including employer contributions.
- Tapered annual allowance: if threshold income is over £200,000 and adjusted income is over £260,000, the allowance falls by £1 for every £2 over, to a minimum of £10,000.
- Carry forward: unused allowance from the previous three tax years can be used, provided you were a member of a registered scheme in those years. Unused 2023/24 allowance is lost after 5 April 2027.
- Money purchase annual allowance: once you have flexibly accessed a defined contribution pension, for example by taking taxable drawdown income, contributions to defined contribution pensions are limited to £10,000 a year.
Budget and inheritance tax context
The Autumn Budget is on 28 October 2026. Pension relief is often rumoured to change, for example to a single flat rate, but nothing has been announced and rumour alone is no reason to delay a planned contribution. Already legislated: from April 2029, salary sacrificed into a pension above £2,000 a year will no longer be free of National Insurance, with the detail to be set by regulations, and unused pension funds coming into the estate for inheritance tax from April 2027. Our article on pensions and inheritance tax from April 2027 explains the impact; see also what to do before 28 October.
What to do now
- Check whether each pension you pay into is relief at source, net pay or salary sacrifice.
- If any is relief at source and you paid tax above the basic rate, gather annual statements back to 2022/23.
- Check past returns or tax codes for the gross contributions. Claim missed years, starting with 2022/23 before 5 April 2027.
- Near £100,000 or £60,000? Size this year's contribution, within your earnings and annual allowance, to bring adjusted net income below the threshold by 5 April 2027.
We help high earners with pension relief claims, backdated corrections and contribution planning as part of our personal tax work. Book a consultation and we will check whether you are owed anything.
This article is general information about UK tax, based on the law and HMRC practice at the date shown above. It is not advice, and reading it does not make you our client. Tax rules change and their effect depends on your circumstances, so please speak to us before acting on it.